COURT OF APPEAL FOR ONTARIO

CITATION: Foodinvest Limited v. Royal Bank of Canada, 2020 ONCA 665

DATE: 20201022

DOCKET: C66522

Doherty, Paciocco and Coroza JJ.A.

BETWEEN

Foodinvest Limited

Plaintiff (Appellant)

and

The Royal Bank of Canada

Defendant (Respondent)

Glenroy K. Bastien, for the appellant

Catherine Francis, for the respondent

Heard: October 13, 2020 by video conference

On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated December 27, 2018.

REASONS FOR DECISION

[1] The appellant (“Foodinvest”) contracted with the respondent (“RBC”) for the use of a self-service transfer facility (“RBC Express”) provided by RBC. That service allowed customers to personally transfer and receive funds from other financial institutions.

[2] Between March and May 2015, Foodinvest used RBC Express to transfer funds to accounts in a Polish bank. Foodinvest subsequently claimed the beneficiary of the transferred funds had misappropriated those funds and defrauded Foodinvest.

[3] In late April 2015, RBC received an email from the Polish bank to which the funds were being transferred, indicating the Polish bank suspected fraud in relation to two of the transactions in which Foodinvest had used RBC Express to transfer funds to the Polish bank. RBC did not pass this information on to Foodinvest. Foodinvest sued, maintaining RBC was under a duty to do so.

[4] RBC moved for summary judgment. The motion judge granted summary judgment and dismissed the claim. Foodinvest appeals.

[5] In dismissing the claim, the motion judge found, first, Foodinvest failed to show RBC’s duty of care to Foodinvest extended to an obligation to pass on the information provided by the Polish bank in respect of its suspicions about the intended recipient of the funds. Second, the motion judge found, even if a duty of care existed, Foodinvest had offered no expert evidence in respect of the standard of care owed by RBC in the circumstances. The motion judge reasoned, absent expert evidence of acceptable banking practices, there was no basis upon which to find the steps taken by RBC in respect of the impugned transactions fell below the applicable standard of care.

[6] Foodinvest raises three arguments on the appeal. First, it submits the claim advanced by Foodinvest raised novel legal issues which turned on facts that were very much in dispute. Foodinvest submits its claim was not amenable to determination on a summary judgment motion.

[7] We reject the submission. It was not made before the motion judge. In any event, the claim is not novel. The nature and extent of RBC’s duty of care falls to be determined under the principles articulated in Deloitte & Touche v. Livent Inc. (Receiver of), 2017 SCC 63, [2017] 2 SCR 855, at paras. 30-31. Nor did the factual circumstances in which those principles fall to be applied here, rise to a level of novelty or complexity unamenable to the summary judgment process.

[8] Second, Foodinvest submits the motion judge erred in holding that RBC’s duty of care to Foodinvest did not extend to the requirement that RBC pass on the information from the Polish bank relating to its suspicions concerning the transactions. Foodinvest maintains once RBC was aware the Polish bank was concerned about the bona fides of the transaction, it had a duty to “ascertain what the problem was and to inform the appellant promptly, comprehensively and competently”. Foodinvest stresses this duty arises only because of the “unusual circumstances” of this case.

[9] We cannot accept this submission. We agree with the motion judge’s duty of care analysis. The scope of RBC’s duty of care to Foodinvest depended on the nature of the service it provided and the terms of the contractual relationship governing that service.

[10] The service provided by RBC consisted of a self-service portal allowing Foodinvest to make and receive bank transfer on its own without the assistance or supervision of any bank personnel. The relevant agreement set out in exhaustive terms the nature and scope of RBC’s potential liability in respect of the services it offered to Foodinvest. Like the motion judge, we conclude RBC’s duty of care related specifically to the execution of the transfers made using the service provided by RBC. RBC’s duty of care extended to taking reasonable steps to ensure the transfers were properly authorized and properly carried out in accordance with the instructions provided. That duty did not require RBC to concern itself with the specifics or bona fides of the underlying transactions giving rise to the transfers.

[11] The transfers in issue were all authorized by Foodinvest. They were carried out in accordance with the intentions of Foodinvest and the instructions provided by it. If Foodinvest was cheated, its loss flows not from any failure of the service provided by RBC, but from the dishonesty of the entities Foodinvest chose to do business with.

[12] As we agree with the motion judge’s finding RBC did not breach any duty of care it owed to Foodinvest, it follows the action was properly dismissed. We need not consider the trial judge’s further conclusion Foodinvest was obligated to call expert evidence as to appropriate banking practices in the circumstances.

[13] We make two additional observations. First, the motion judge made references to RBC’s obligation under FINTRAC, a regulatory scheme intended to detect and curtail money laundering. It is arguable some of the motion judge’s comments overstated RBC’s obligations under FINTRAC. However, an exact delineation of those obligations is unnecessary to dispose of the appeal. Second, even if RBC could be said to have owed some duty of care to Foodinvest beyond the duty described above, there was substantial evidence adduced by RBC of steps taken to alert Foodinvest to the possibility of fraud in respect of the transfers. Given the motion judge’s findings as to the scope of RBC’s duty of care, he did not find it necessary to examine that evidence in any detail. Nor do we.

[14] As indicated at the end of oral argument, the appeal is dismissed. RBC does not seek costs. No order as to costs.

“Doherty J.A.”

“David M. Paciocco J.A.”

“S. Coroza J.A.”